The price data this past week reflected not much change in the inflation picture. But inflation pressure continues to build.

Nowhere is this more pronounced than in the auto sector. The price of metals and plastics is higher now than a year ago. And it costs about 4 percent more for an hour of labor to put these materials together in building the car. Yet the price of a new 2008 model is 1.1 percent cheaper than a 2007 model was one year ago. Moreover, with the price of a gallon of gasoline up over $3 in most of the country, the cost of transporting materials or finished goods is higher. So if retail inflation is not edging higher, profit margins must be thinning. This is going to be a headline story in the first half of 2008, pushing the housing story off the front page.

Tuesday, November 20, 2007

8:30 AM Housing Starts and Building Permits (Bureau of the Census)

The rate of home building in September was slower than it has been in more than a decade. It might have slowed a little more in October. But it might be nearing a bottom.

Wednesday, November 21, 2007

10:00 AM Composite Indexes of Leading, Coincident and Lagging Indicators (The Conference Board)

The indicators for the domestic economy have been pointing to slow, but not necessarily slower economic growth ahead. The indicators for other countries have been a little more robust. Did any of this change last month?

Thursday, November 22, 2007

Happy Thanksgiving

Tuesday, November 27, 2007

10:00 AM Consumer Confidence (The Conference Board)

After remaining rock steady in the face of housing woes and higher energy costs, consumer expectations wilted a little in September and October. What happened in November?

Wednesday, November 28, 2007

8:30 AM Advance Report on Durable Goods Manufacturers' Shipments and Orders (Bureau of the Census)

After falling by almost 2 percent in September, the ordering rate probably snapped back a little in October. But even if it did, the overall trend reflects some caution about business investment going forward. That caution is likely to be in evidence right into the new year.

Thursday, November 29, 2007

8:30 AM Gross Domestic Product & Corporate Profits (3Q - 2007) (Bureau of Economic Analysis)

While revisions steadily pushed up the growth rate for the second quarter, do not expect much change to the initial estimate of 3.9 percent GDP growth (annualized) for the third quarter. Far more important, it is becoming clearer by the day that growth in the fourth quarter may not be much more than half that.

10:00 AM Help-Wanted Advertising Index (The Conference Board)

Labor market indicators have been reflecting a slower pace to hiring over the next few months. Was the picture changed at all in October?

Friday, November 30, 2007

8:30 AM Personal Income and Outlays (Bureau of Economic Analysis)

Consumer spending power has been rising a little faster than consumer spending. Look for the data to reflect this pattern in October. It might be the pattern through the holiday season.

BY THE END OF THE WEEK

The domestic economy is slow. Pessimists think it could slow to only 1.5 percent growth in GDP (annualized). That could happen if the housing slump intensifies and higher gas, heating, and grocery prices turn the consumer much more cautious and nervous. If the consumer holds up, growth closer to 2.5 percent might be the story through the end of the year and into 2008.

Another recent change is some slowing in Europe. Global economic growth remains robust, largely because growth in the Pacific Rim is holding up. Financial markets remain jittery. Profit growth across the globe is likely to edge lower as prices for energy and other raw commodities edge up. It all spells a relatively weak start to 2008. But that might be the good news: it can only get better as the year unfolds. Can't it?